Malave v. Carney Hospital ( 1999 )

USCA1 Opinion

                 United States Court of Appeals

                     For the First Circuit











No. 98-1718



                         MARIE M. MALAVE,



                      Plaintiff, Appellant,



                                v.



                     CARNEY HOSPITAL, ET AL.,



                      Defendants, Appellees.







           APPEAL FROM THE UNITED STATES DISTRICT COURT



                FOR THE DISTRICT OF MASSACHUSETTS



         [Hon. Edward F. Harrington, U.S. District Judge]







                              Before



                      Selya, Circuit Judge,



                 Bownes, Senior Circuit Judge,



                   and Lipez, Circuit Judge.







     Robert LeRoux Hernandez for appellant.

     Michael F.X. Dolan, Jr., with whom Robert H. Morsilli and

Murphy, Hesse, Toomey & Lehane were on brief, for appellees.











March 9, 1999













  SELYA, Circuit Judge.  This appeal stems from a

discrimination suit filed by plaintiff-appellant Marie M. Malave

against her quondam employer, Carney Hospital (the Hospital).  In

the underlying case, Malave alleged disparate treatment on the

basis of disability, race, and national origin.  In the midst of

discovery, the opposing lawyers agreed to a $15,000 settlement.

Nevertheless, when the Hospital's counsel forwarded a proposed

settlement agreement, the appellant refused to execute it, claiming

that she had never authorized her attorney to settle the case for

less than $30,000.

     The Hospital asked the district court to enforce the

purported settlement.  The court granted the motion without holding

an evidentiary hearing.  This appeal followed.

     A party to a settlement agreement may seek to enforce the

agreement's terms when the other party reneges.  If, at the time of

the claimed breach, the court case already has been dismissed, the

aggrieved party may bring an independent action for breach of

contract.  See Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375,

381-82 (1994).  If, however, the settlement collapses before the

original suit is dismissed, the party who seeks to keep the

settlement intact may file a motion for enforcement.  See United

States v. Hardage, 982 F.2d 1491, 1496 (10th Cir. 1993) ("A trial

court has the power to summarily enforce a settlement agreement

entered into by the litigants while the litigation is pending

before it.") (citations omitted);  Mathewson Corp. v. Allied Marine

Indus., Inc., 827 F.2d 850, 852-53 (1st Cir. 1987) (similar).  In

a federal court, such a motion   at least when the underlying cause

of action is federal in nature   is determined in accordance with

federal law.  See Michaud v. Michaud, 932 F.2d 77, 80 n.3 (1st Cir.

1991); Fennell v. TLB Kent Co., 865 F.2d 498, 501 (2d Cir. 1989);

Mid-South Towing Co. v. HarWin, Inc., 733 F.2d 386, 389 (5th Cir.

1984); Gamewell Mfg., Inc. v. HVAC Supply, Inc., 715 F.2d 112, 115-

16 (4th Cir. 1983).

     As a general rule, a trial court may not summarily

enforce a purported settlement agreement if there is a genuinely

disputed question of material fact regarding the existence or terms

of that agreement.  In such circumstances, the cases consentiently

hold that the court instead must take evidence to resolve the

contested issues of fact.  See Murchison v. Grand Cypress Hotel

Corp., 13 F.3d 1483, 1486 (11th Cir. 1994); TCBY Sys., Inc. v. EBG

Assoc., Inc., 2 F.3d 288, 291 (8th Cir. 1993) (per curiam);

Hardage, 982 F.2d at 1496; Bamerilease Capital Corp. v. Nearburg,

958 F.2d 150, 153 (6th Cir. 1992); Tiernan v. Devoe, 923 F.2d 1024,

1031 (3d Cir. 1991); Petty v. Timken Corp., 849 F.2d 130, 132 (4th

Cir. 1988); Callie v. Near, 829 F.2d 888, 890 (9th Cir. 1987); Mid-

South Towing, 733 F.2d at 390; Autera v. Robinson, 419 F.2d 1197,

1203 (D.C. Cir. 1969).  It is against this backdrop that we assess

the record here.

     When the Hospital filed its motion to enforce, it

tendered an unsigned copy of a draft settlement agreement and its

counsel's affidavit explaining its version of the attendant

circumstances.  The lawyer, Michael F.X. Dolan, Jr., recounted

"back and forth" conversations with his opposite number, Matthew

Cobb, during which Cobb made a settlement demand of $15,000.  Dolan

stated that he agreed to pay the demanded sum in return for a

stipulation of dismissal and a general release.  He then

transmitted a proposed agreement to Cobb both by facsimile and by

mail.  Though the agreement seems prolix and covers a multitude of

subjects (e.g., a waiver of any right to reemployment; a covenant

not to comment on the payment or to speak ill of the releasees),

the Hospital takes the position that it was boilerplate.

     There is no way that these materials, standing alone,

would justify summarily enforcing a settlement agreement.  Evidence

supplied by one side to the dispute, especially nontestimonial

evidence not subject to cross-examination, ordinarily will not

suffice to ground enforcement of an ostensible settlement.  SeeHardage, 982 F.2d at 1497; Callie, 829 F.2d at 891.  But the

district court had before it more than this one submission.  Four

days after the Hospital served its motion, Cobb filed a response.

It is evident from even a cursory glance that this pleading did not

purport to represent the appellant's views, protect her interests,

or advance her position.  To the contrary, its contents made

manifest that Cobb (who wished to consummate the settlement) and

his client (who wished the litigation to proceed) were at swords'

point.

     Even though the document that Cobb filed declared that he

had received authority from Malave to effectuate a $15,000

settlement, it went on to state that Malave's son, on Malave's

behalf, had called Cobb within a day or two to make sure that Cobb

understood that he did not have authority to settle the case for

that sum.  This recitation ought to have alerted the district court

that something had gone awry, and that the extent of Cobb's

authority was open to question.  We cannot conceive of a more

fundamental dispute concerning the existence vel non of a

settlement agreement than occurs when a litigant and her lawyer

wrangle over whether the former imbued the latter with authority to

settle.

     Moreover, this was not an instance in which the existence

of the settlement had somehow been conceded previously by both

parties or in which the court had been able to acquire personal

knowledge through, for example, a settlement conference or a

hearing.  See Murchison, 13 F.3d at 1487; Petty, 849 F.2d at 132-

33; Autera, 419 F.2d at 1200.  Prudence dictates the a trial court,

confronted with so tenebrous a record, should withhold summary

enforcement and instead probe for better evidence on which to base

an informed determination as to whether the parties had in fact

reached a binding agreement.  This is all the more true where, as

here, the motion papers clearly contemplated that an evidentiary

hearing would be held, and the response to the motion explicitly

requested such a hearing.

     Setting the nature and quality of the requisite evidence

to one side, the Hospital argues that the purported settlement must

stand because it (the Hospital) relied on Cobb's representations

about his authority.  In mounting this argument, the Hospital draws

upon the doctrine of apparent authority, under which third parties

who detrimentally rely on an agent's unauthorized representations

sometimes may hold the principal to the consequences of such

reliance.  See, e.g., Veranda Beach Club Ltd. Partnership v.

Western Surety Co., 936 F.2d 1364, 1377 (1st Cir. 1991).  As

suggested by our earlier analysis, the doctrine of apparent

authority may not be invoked in these purlieus.  Under hoary

principles of federal common law, a general retainer, standing

alone, does not permit an unauthorized attorney to settle claims on

his client's behalf.  See United States v. Beebe, 180 U.S. 343, 352

(1901); Michaud, 932 F.2d at 80; see also Holker v. Parker, 11 U.S.

(7 Cranch) 436, 452 (1813).

     This rule rests on the salutary proposition that the

decision to settle litigation belongs to the client, not the

lawyer.  See Michaud, 932 F.2d at 80; Fennell, 865 F.2d at 501-02.

The rule logically implies that a settlement agreement entered into

by an attorney is ineffective if the attorney did not possess

actual authority to bind the client, and the cases so hold.  SeeMorgan v. South Bend Community Sch. Corp., 797 F.2d 471, 478 (7th

Cir. 1986); Luis C. Forteza & Hijos, Inc. v. Mills, 534 F.2d 415,

418 (1st Cir. 1976); see also Garabedian v. Allstates Eng'g Co.,

811 F.2d 802, 803 (3d Cir. 1987) (per curiam) (tacitly adopting

actual authority requirement).  Since actual authority is the

barometer and the evidence before the district court did not compel

a conclusion that Cobb possessed actual authority to conclude a

settlement, the Hospital's motion for summary enforcement could not

be granted.  See Millner v. Norfolk & W. Ry. Co., 643 F.2d 1005,

1009-10 (4th Cir. 1981) (holding that the existence of a dispute

over an attorney's authority to settle renders summary enforcement

inappropriate).

     There is also the Hospital's contention, emphasized at

oral argument, that we should overlook all else because there has

been an accord and satisfaction.  In its most familiar iteration,

accord and satisfaction envisions that the parties will settle a

dispute on terms requiring payment by one party of a sum greater

than that which he admits he owed and receipt by the other party of

a sum less than that which she claims is due, thereby extinguishing

the underlying claim.  See, e.g., Cadle Co. v. Hayes, 116 F.3d 957,

962 (1st Cir. 1997).  The Hospital attempts to invoke the doctrine

on the basis   nowhere reflected in the district court record

that Malave (or Cobb, on her behalf) accepted and cashed a check

for $15,000 that constituted the consideration for the purported

settlement.  This initiative fails for two reasons.

     First, in this context, an accord and satisfaction

requires a voluntary, mutually assented to exchange of money for a

release.  See id.  There is absolutely no evidence of voluntariness

or mutuality here, and what little we know points the other way.

As the Hospital itself admits in its brief, it sent a check to

Cobb, for Malave, pursuant to the instructions set forth in the

district court's enforcement order.  That order was the functional

equivalent of a mandatory injunction.  These circumstances hardly

bespeak either voluntariness or mutuality.

     The second basis for rejecting the Hospital's accord and

satisfaction argument relates to the bedrock rule of appellate

practice that, except in the most extraordinary circumstances (not

present here), matters not raised in the trial court cannot be

hawked for the first time on appeal.  See National Ass'n of Soc.

Workers v. Harwood, 69 F.3d 622, 627 (1st Cir. 1995); Teamsters

Union, Local No. 59 v. Superline Transp. Co., 953 F.2d 17, 21 (1st

Cir. 1992); McCoy v. Massachusetts Inst. of Tech., 950 F.2d 13, 22

(1st Cir. 1991).  The Hospital's attempt to raise an accord and

satisfaction defense offends this rule.

     The fact that the purported accord and satisfaction took

place after the district court entered the enforcement order does

not relieve a litigant who wishes to rely on it of the obligation

to bring that matter first to the trial court's attention.  Accord

and satisfaction is a fact-based defense   and one important reason

for the rule requiring litigants to broach matters initially with

the trial court is that adherence to it allows the parties to

develop the relevant facts.  In turn, this gives a court which

possesses a factfinding capability an opportunity to resolve new

issues in an informed manner   a praxis that provides invaluable

assistance when the appellate court thereafter performs its

reviewing function.  Here, there are no facts in the record

concerning the ostensible accord and satisfaction   merely

assertions.  We cannot intelligently decide cases on so problematic

a basis.

     We need go no further.  Summary enforcement of arm's-

length settlements is a useful device to hold litigants to their

word, but the procedure ought to be reserved for situations in

which a struck bargain is admitted or proved, and the basis for

nonperformance is insubstantial.  Thus, when a district court

purposes summarily to enforce a settlement, it first must ascertain

whether or not a binding agreement in fact existed.  The evidence

before the district court in this case raised too many unanswered

questions as to the existence vel non of such an agreement.

Therefore, the court ought not to have granted the Hospital's

motion to enforce the purported settlement without taking evidence

and resolving the disputed issues of  material fact.



     The order enforcing the putative settlement is vacated

and the case is remanded to the district court for further

proceedings.